 The
Employment Contract
Duration
of Employment Contract
Termination
of an Employment Contract
Additional
Information
The
Employment Contract
An employment contract in
writing gives many benefits to both parties
to the contract. The contract can be used to prove
what has been agreed upon. By using contract forms
specially designed for the branch concerned, the
parties can be sure that all terms required by law
and having importance in the branch are included
in the contract. A written contract gives the employee
the message that the employer is a reliable contract
party.
Design of the content of an employment
contract
When designing the content of an employment contract,
the employer should have at least the following material
available: the collective agreement for the branch
concerned, Employment Contracts Act, Working Hours
Act and Annual Holidays Act, as well as an employment
contract form for the branch, or a general employment
contract form.
The content of the employment contract is affected
at least by the following:
- the employer’s and the employee’s needs
- the provisions of the Employment Contracts Act
defining which matters, as a minimum, should be agreed
on
- the minimum terms set by the collective agreement
for the branch – no contract can be concluded
below that level
- the provisions of the Employment Contracts Act,
Working Hours Act and Annual Holidays Act restricting
the content of the employment contract
Information in writing
If there is no employment contract in writing
prior to commencement of employment, or the information
mentioned below does not appear in the existing employment
contract, the employer shall without any separate
request provide the employee with written information
on the terms of the employment relationship. The information
shall be given to the employee by the end of the first
pay period. There is no need to give the information
if the employment relationship for a fixed term will
be shorter than one month.
If the same employer employs the same employee continuously
for fixed terms shorter than one month under the same
terms, the information shall be given within a month
from the beginning of the first employment. There is
no need to give the same information repeatedly if
the terms do not change. If the terms for the employment
relationship change, the employee shall be informed,
in writing, of the new terms by the end of the pay
period following the change.
Minimum content of a written employment
contract:
- date of commencement of the work
- duration of a fixed-term employment contract and
the ground for the fixed term
- trial period (when an agreement has been made on
a trial period)
- place where the work is performed or, if the employee
has no primary fixed workplace, an explanation of
the principles according to which the employee will
work in various work locations
- employee’s principal duties
- collective agreement applicable to the work
- ground for the determination of pay, and the pay
period
- regular working hours
- manner of determining annual holiday
- period of notice and the grounds for determining
it
- in the case of work performed abroad for a minimum
period of one month, the duration of the work, the
currency in which the monetary pay is to be paid,
the monetary remunerations and fringe benefits applicable
abroad, and the terms for the repatriation of the
employee.
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Duration
of Employment Contract
Indefinite or fixed-term
It is always allowed to employ persons for indefinite
periods that remain valid for the time being. If the
employer aims to employ a person for a fixed term,
the fixed term shall be agreed on and there have to
be justified grounds for it. The grounds shall be indicated
in the employment contract. Such grounds are, for example:
- acting as a substitute
- seasonal work
- fixed-term project
- one-time work
- training period in an educational institute
- fixed term of a trainee contract
If the employer cannot indicate any fixed-term purpose
for the employment contract, the employment contract
is considered to be valid for an indefinite time.
Trial period
The purpose of a trial period is to find out the prerequisites
for continuing the employment. This happens by going
through a short trial period at the beginning of the
employment relationship. An agreement has to be made
on the trial period and its length. If the collective
agreement to be applied requires a trial period for
a certain time, the employer must inform the employee
of the trial period when the employment contract is
made. When no information has been given about this
and the contract does not include a trial period, there
is no trial period included in the employment relationship.
The trial period starts from the beginning of the
employment relationship, and lasts uninterruptedly
for the time period that has been agreed upon. The
agreed trial period must not be prolonged. The maximum
trial period is usually four months. If a fixed-term
employment relationship is shorter than eight months,
the trial period may not exceed half of the duration
of the employment period. If the collective agreement
to be applied by the employer restricts the duration
of the trial period, the employer must not agree on
a longer trial period.
Termination
of an Employment Contract
Period of notice, and expiration
of fixed-term employment contracts
Employment contracts made for an indefinite period
are usually terminated by one of the parties giving
notice. The notice will be followed by a period agreed
upon by the parties, or defined by the collective agreement
or by law. During a trial period, either party may
cancel the employment contract, in which case there
will be no period of notice. Fixed-term employment
contracts expire, without giving notice and without
any period of notice, at the end of the fixed term,
or when the agreed work is completed.
Protection against unjustified dismissal
The employer must not terminate an indefinitely valid
employment contract without proper and weighty reason.
Such reasons can be:
- serious breach or neglect of obligations of the
employee, or such essential changes in the conditions
necessary for working related to the employee’s
person, or
- the work has diminished substantially and permanently
for financial or production-related reasons, or for
reasons arising from reorganization of the employer’s
operations.
Employees who have neglected their duties arising
from the employment relationship shall not be given
notice before they have been warned and given a
chance to amend their conduct. Additionally, the
employer shall, before giving notice, find out whether
it is possible to avoid giving notice by placing the
employee in other work.
If the work of employees has substantially and permanently
diminished, they must not be given notice if they can
be placed in, or trained for, other tasks by offering
them work that is equivalent to that defined in their
employment contracts. If no such work is available,
they shall be offered other work equivalent to their
training, professional skill or experience.
The employer shall, before giving notice, make sure
that the giving of notice is based on facts and that
its grounds fulfil the conditions for giving notice.
The employer should ask for advice and help from their
employer organization.
Right to cancel the employment contract
It is possible, in exceptional circumstances, to terminate
an employment contract by cancelling it if one of the
parties of the contract seriously neglects his or her
duties or violates the employment contract. In such
a case the employment contract is terminated with immediate
effect without any period of notice. The right to cancel
an employment contract requires such a weighty reason
that it is unreasonable to expect that the person who
cancels the contract should continue the contractual
relationship for the period of notice.
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